10.2 – Governance and Management

Author: Dr. Jean-Paul Rodrigue

Transportation systems are complex assets that are under a governance structure and managed accordingly.

1. Transportation Governance

Transportation infrastructures have become so complex in terms of management and scale of operation that governance models need to be revised. The main circumstances under which governance can be revised include:

  • When a transport infrastructure is experiencing a decline in traffic or is losing its market share, often because of higher operating costs.
  • When the behavior of competing organizations or facilities may be perceived as unfair, such as being subsidized.
  • When there is the potential duplication of infrastructure as each competing facility is vying for the same traffic. This particularly takes place when different jurisdictions are competing to attract economic development opportunities.
  • When the effectiveness of the existing governance structure is being questioned, often triggered by allegations of corruption and waste of resources.
  • When the scale of an existing or projected transportation infrastructure project, such as an airport, is so complex that a public entity cannot effectively manage it.

From a tradition of public provision and management, there is a growing tendency towards privatization in transport as a whole, particularly with deregulation. Inefficiencies of national and international regulations, notably over environmental issues, has created opportunities for non-governmental actors such as private companies and trade groups to be more actively involved in regulatory and governance matters.

Thus, the setting of public/private partnerships is seen as a dominant trend in the governance of transportation. Transport terminals increasingly became an attractive form of investment for private equity firms seeking valuable assets and a return on their investments. This is manifested in the sale of ports and airports in some countries such as the UK, and the break-up of state rail monopolies, as in the EU. Privatization is most evident, however, in the awarding of operational concessions to private companies. The trend towards concessions is warranted in part by the belief that the private sector is more efficient than the public in operating terminals. This form of governance keeps the ownership still under public control. It is also seen as a means of reducing public expenditures at a time when states are becoming less willing (or able) to make substantial investments.

2. Management of Transport Systems

The transportation industry is changing significantly in form and function that the significant changes in the way it is organized and managed tend to be overlooked. Yet, it is through different management practices that the spatial manifestations of the industry are expressed. It is perhaps easiest to see the changes in management through the lens of governance, where an industry that used to be primarily managed and controlled by the public sector has become increasingly controlled by the private sector. The privatization of transport companies and infrastructures has been an important feature of the last decades and is likely to continue further into the present century. However, there are still many issues about the role of the public sector in transportation, and deregulation, which has prevailed, could be reversed.

The growing role of the private sector over an industry that has become global and multi-functional has necessitated a shift in management and ownership relationships that are still evolving. They include:

  • The emergence of horizontally linked global corporations that, through a series of acquisitions and mergers, have bought up similar operating companies in different markets. A good example is the global port terminal operators.
  • The development of vertically integrated corporations that have grown by merger and acquisition to control several segments of the transport chain, namely modes and terminals.
  • Intermediaries that provide transport services on a global scale, without direct ownership of infrastructure. 3PL companies operate in many markets and are major actors in the transport chain.
  • Alliances, informal groupings of transport providers that pool resources and offer joint services between major global markets as the partners combine their respective regional networks.

At the same time, transport is being increasingly integrated into global production systems. It is becoming an integral part of production and distribution chains. These management and business structures give rise to distinct patterns of spatial organization, with different operating practices. The operational interests of a vertically integrated enterprise are different than one horizontally linked. This highlights the need to understand the nature of the organization of the businesses involved in transport as a means of explaining existing patterns and predicting their future forms. The organization of transport firms explains the concentration of traffic (and resultant congestion) as much as it is by demand and capacity. In turn, the organization of the global firms themselves is shaped by conditions of local markets. A distinct geography of transport firms exists, a geography that is still ill-understood.

Another change in the management of transport systems concerns information technologies and the automation of vehicles and terminals, which open new venues in operations and the management of transportation assets. Although self-driving vehicles are still in the experimentation phase, their potential implementation may lead to a much higher use of existing vehicle assets. The same number of vehicles could carry more people or freight while putting fewer pressures on existing roads, highways, terminal, or rail lines. Terminal automation is more advanced, particularly at port terminals and distribution centers. For instance, the rise in e-commerce has been a driver for the automation of distribution centers, particularly e-fulfillment centers. Congestion and demand peaks, a recurring challenge for transportation, could be more effectively mitigated.

3. The Digitalization of Mobility

Technology, including information technologies, is seen by many transport actors (planners, operators) as a solution to a wide range of transport problems. It involves providing better information and control over traffic flows and individual vehicle use. This is an approach that has achieved wide acceptance where there is a strong emphasis on seeking engineering solutions to transport problems.

A promising approach involves interactive highways. They are a means of communication between the road and driver that warn of approaching road conditions. Warnings include electronic message boards that suggest alternate routes to approaching motorists, designated radio frequencies that give updated traffic reports, and traffic information supplied to mobile applications. It is based on a closed-circuit TV system (CCTV) that records lane-by-lane occupancy, volume, and speed. At the same time, ramp meters record in real-time the amount of traffic entering the highway. This information is analyzed and processed at a control center that can dispatch emergency equipment to accidents as they happen, and can inform other drivers of road conditions, accidents, construction, and delays.

Further technology is emergency signal priority. This provides emergency vehicles and public transport buses priority at traffic lights in congested areas. The system allows a vehicle equipped with a system emitter to send a coded signal to the system detector, installed at the traffic intersection. When activated, the sensor receives the encrypted message and then either hold the existing green light until the vehicle passes through or changes the existing red light to a green light. Similar technologies can be used to modify the traffic light cycle according to the direction and intensity of traffic.

Information technologies are providing many solutions to the problems of road pricing. Toll collection is increasingly using electronic means to collect tolls without requiring vehicles to stop at toll booths. In its simplest form, vehicles equipped with a transponder that emits details of the vehicle are allowed to pass through toll lanes without stopping to pay. Receptors at the booth record the passage and debit the account. This is at the heart of the cordon pricing and of most new toll systems in place. Toll collection is evolving further away from the conventional toll booth approach where a fare was manually collected or a vehicle needed to slow down to go through a toll gate. The latest systems are gantries on top of collection points where the electronic tags of vehicles are scanned and wherein the case of a vehicle without tag license plates are photographed for an invoice to be issued to the registrant’s address after a specific amount of time or number of toll use.

An emerging digitalization paradigm concerns mobility as a service where transportation services are offered to users through information technology platforms. There is thus the possibility to better use existing transportation assets through a higher level of market transparency in the cost, scheduling, and availability of services.

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